Compressed Natural gas (CNG) can also be used to fuel internal-combustion engines, and is the most practical strategy. Natural gas, often found with petroleum is typically found in underground deposits. To use natural gas, the methane component, which makes up 50 to 100 percent of natural gas has to be processed in order to remove contaminants as well as other useful fuels such as butane and propane.

PROS: With an octane rating of up to 130, CNG has the potential to optimize an engine's thermodynamic efficiency through a high compression ratio. However, some CNG vehicles are able to run on either CNG or gasoline, which obviates the octane advantage. According to the DOE, a CNG-fueled Honda Civic GX, the sole widely available CNG-only vehicle in the United States--produces 90 percent less CO2, and 60 percent less nitrogen oxides (NOx) than its gas-powered counterpart. According to the manufacturer, CO2 in the car's exhaust is reduced by approximately 35 percent, which is cleaner than the air in the nation’s high-pollution areas.

CONS: For a vehicle to carry enough CNG to travel a reasonable distance, the gas has to be compressed to more than 3000 psi. Even at 3600 psi, compressed natural gas has about one-third as much energy as gasoline, about 44,000 BTU per unit volume; the tank must be far larger, heavier and therefore, more expensive than a conventional fuel tank. Additionally, energy is consumed during the compression process and CNG requires a major retooling of the fuel-station infrastructure.
Currently available in nine states is a compressor/refueler called Phill that uses 2 kilowatt-hours (kwh) of electricity to compress the equivalent of 1 gallon of gasoline. With electricity averaging 10 cents per kwh nationwide, the price of CNG goes up 20 cents per gallon over the cost of the natural gas itself, but is still a bargain compared to gasoline. A gallon of this gas equivalent (GGE) costs about $1.20, including the cost of compression; thanks in part to the lack of the taxes which are added to every gallon of gasoline.
Outlook: Even though 85 percent of our natural gas is produced domestically, and there's already a distribution network in place, compressed natural gas faces a limited future as a pure petroleum product replacement as it is (also) nonrenewable. The demand for natural gas is growing, and petroleum burning cars can easily be refitted to make them compressed natural gas compatible.